Slowdown hits commercial vehicle sales in Gujarat

AHMEDABAD: Slowdown in business across various sectors such as garments, textiles, engineering, chemicals and white goods, has adversely affected the sales of commercial vehicles in Gujarat. In July, commercial vehicle registrations hit rock bottom with 1,484 vehicles, declining 72% against July 2019, when 5,301were registered, according to data released by Federation of Automobile Dealers’ Association (FADA). Industry estimates suggest that the demand has dried up due to slowdown in industries coupled with idle fleets.
“With industrial production slowing across various manufacturing sectors, 40% of transport vehicle fleets are lying idle and thus, the demand for new vehicles has dried up. Transporters usually buy trucks in exchange for new ones, to adjust costs. However, there are hardly any takers for second-hand trucks after the lockdown. Due to the financial crunch, new purchases got halted,” said Mukesh Dave, president, All Gujarat Truck Transporters’ Association (AGTTA).

Dave also mentioned that the decline in transport vehicle sales can also be attributed to the liquidity crisis faced by industry and transporters. “These purchases are usually made on financing. However, recently, the financing companies have tightened norms for lending money which has also hampered sales of commercial vehicles,” said Dave.
Two-wheeler and four-wheeler sales took a hit in July showing a decline of 53% and 28% respectively against the same month last year. While twowheeler registrations went down from 98,496 vehicles to 45,731this year, four-wheeler registrations went down from 19,983 to 14,331 during the same period. This is for the second month in a row when two-wheeler sales displayed a steeper decline against four-wheelers. Industry estimates suggest that two-wheeler sales went down over liquidity issues and income shortfall faced by dealers.
“Banks and NBFCs, though flush with high liquidity, are still taking a cautious approach towards funding auto retail, thus affecting the demand revival especially in segments of CV, 3W and 2W. Vehicle funding percentage has fallen by10-15% in many segments pushing the initial contribution beyond reach of many customers,” claimed a statement issued by FADA.